Closing a sale transaction on a property is a long process that involves many steps. When it comes to purchasing a home, buyers strive to make an initial offer that appeals to sellers but keeps them protected in case the property does not turn out to be as magnificent as they believed it to be when first viewing the home. In order to keep their offer secure in case they run into any issues down the line, most buyers include contingencies in their offers. These clauses are an essential part of home transactions.
In order for a sales contract to be binding, contingencies map out what needs to be done. They must all be agreed to by both the buyer and the seller, and they can protect both parties throughout the transaction. Contingencies can be found in the majority of home purchase contracts and are very common in the real estate market.
As a professional real estate agent with years of experience working within some of New Jersey’s most desirable markets, Maryanne Elsaesser with The Home Navigators has an expert understanding of the buying contingencies included in sales contracts. Having managed the sales transactions of countless properties in gorgeous neighborhoods, ranging from Wyckoff condos and Ridgewood townhomes to Franklin Lakes mansions, Maryanne Elsaesser is adept at assisting buyers and sellers with purchasing or listing their properties, providing them with insight and guidance every step of the way.
To help you through the process of buying or selling your home, Maryanne Elsaesser has developed this guide on everything you need to know about home buying contingencies so that you’re well-informed on these contract details throughout your sales transaction.
Contingencies outline the conditions of the sale
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Contingencies refer to the requirements that need to be met in order for a sales transaction to close. Both buyers and sellers will be aware of the contingencies and must agree to them together.
If the contingencies are not met, the sales contract no longer demands that the buyer purchase the property. All contingencies need to be reached for a transaction to close.
Sellers have the ability to not accept contingencies when offered; therefore, including them in a contract comes at a certain level of risk, as the seller may reject the offer. Buyers tend to include fewer contingencies in an offer when the competition for a property is high. However, in almost every transaction, at least some contingencies are included that outline the conditions of the sale.
There are many different types of contingencies
Photo courtesy of Unsplash There are many types of contingencies that can be included in a contract for a variety of reasons. Whatever the contingency states, this condition must be met in order for the sales transaction to be finalized.
In their offer, buyers often include conditions that are dependent on the results of future circumstances. For instance, these conditions may refer to things involving their financial situation or concerning the quality of the home upon taking a deeper look. There are many different types of contingencies that may be included in a contract, and they all determine the conditions of closing the sale.
An appraisal contingency helps to protect the buyer by making sure a home is valued at a certain amount (typically, the goal is that the home will appraise for the asking price or higher). A financing contingency may also be included, giving the buyer the opportunity to obtain financing for the purchase. Some people also add a home sale contingency, which allows them time to sell their current home to finance the new one. Inspection contingencies are also common, making the sale dependent on the results of a professional inspection.
Each contingency that is included in an offer refers to a specific set of requirements that need to be met in order for the sales transaction to close.
Contingencies provide the parties with protection
Contingencies are a popular part of home buying because they provide the parties with a level of protection throughout the sales transaction. If the contingencies included in the initial offer aren’t met, the parties have the right to legally back out of the contract under the special circumstances that were outlined and agreed to. For instance, if a property appraises at a much lower value than expected, if a buyer fails to get financing from a lender, or if a home inspection reveals immense damages that were not disclosed, buyers can choose to terminate the contract and no longer be tied to the property. This eliminates a degree of risk and helps them keep their hard-earned dollars secure.
Your real estate agent will guide you
Whether you’re looking to buy a home or sell your property, working with a professional real estate agent is highly recommended when navigating negotiations and contingencies. Agents are experts in the communities they serve and possess the necessary skills and valuable knowledge required to navigate competitive housing markets. When dealing with complex issues in the sales transaction, such as contingencies in contracts, real estate agents can provide incredibly valuable guidance. They know all about the many different types of contingencies that can be included in contracts and assist both buyers and sellers with handling them. To close a sales transaction successfully, having a real estate agent by your side gives you an excellent advantage.
If you’re searching for professional guidance and are in need of a qualified real estate agent in New Jersey, contact Maryanne Elsaesser and her team today. With years of experience managing the sales transactions on tons of properties in highly desirable New Jersey neighborhoods, such as the Wyckoff real estate and Franklin Lakes real estate markets, Maryanne and her team can help you find the home of your dreams or sell your property at a premium price. No matter what your goals are, The Home Navigators team has the skills and expertise needed to make your home transaction a success.
*Header photo courtesy of Unsplash
*Header photo courtesy of Unsplash
